- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[Mark One]
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to .
Commission File No. 1-11822
TRANSCOR WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0369288
(State of incorporation) (I.R.S. Employer Identification Number)
1502 Second Avenue, East, Tampa, Florida 33605
(Address of registrant's principal executive offices,
including zip code)
(Registrant's telephone number, including area code): (813) 248-5885
Not applicable
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by a check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
Applicable Only to Corporate Issuers
The number of shares of Common Stock outstanding on November 6, 1998, was
3,913,300 shares.
- --------------------------------------------------------------------------------
<PAGE>
TRANSCOR WASTE SERVICES, INC.
FORM 10-Q
INDEX
<TABLE>
<S> <C> <C>
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated balance sheets at December 31, 1997 and
September 30, 1998 (unaudited)................................................1 - 2
Consolidated statements of operations for the three months and
nine months ended September 30, 1997 and 1998 (unaudited).....................3 - 4
Consolidated statements of cash flows for the nine months ended
September 30, 1997 and 1998 (unaudited)...........................................5
Notes to consolidated financial statement......................................6 - 14
Item 2. Management's discussion and analysis of financial condition
and results of operations...................................................15 - 22
Item 3. Quantitative and qualitative disclosures about market risk..........................22
PART II. OTHER INFORMATION
Item 1. Legal proceedings..................................................................23
Item 2. Changes in securities..............................................................23
Item 3. Defaults upon senior securities....................................................23
Item 4. Submission of matters to a vote of security holders................................23
Item 5. Other information..................................................................23
Item 6. Exhibits and reports on Form 8-K...................................................23
Signatures.........................................................................24
</TABLE>
2
<PAGE>
SECURITIES AND EXCHANGE COMMISSION FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<S> <C> <C>
December 31, September 30,
1997 1998
(unaudited)
Current assets:
Cash...................................................... $ 2,115,510 $ 9,171,061
Marketable securities. . . . . . . . . . . . . . . . . . . . . --- 21,859,210
Accounts receivable - trade, net.......................... 1,364,772 1,676,740
Costs and estimated earnings in excess of billings on
uncompleted contracts................................... 415,514 344,358
Income tax refund receivable.............................. 143,672 ---
Deferred income taxes..................................... 720,410 375,000
Other current assets...................................... 48,771 65,202
Net assets of discontinued solid waste management
operations.............................................. 7,265,280 ---
---------- ----------
Total current assets ............................... 12,073,929 33,491,571
---------- ----------
Property and equipment, net........................................ 312,748 301,093
Property held for sale............................................. 410,681 1,209,895
Due from affiliate................................................. 4,040,110 1,079,369
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- 20,798
----------- ----------
Total assets......................................... $16,837,468 $36,102,726
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
1
<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
December 31, September 30,
1997 1998
(unaudited)
Current liabilities:
Accounts payable, trade................................... $ 541,104 $1,190,728
Income tax payable........................................ --- 117,435
Accrued expenses.......................................... 954,432 2,225,206
Billings in excess of costs and estimated earnings
on uncompleted contracts................................ 15,978 384,853
Current portion of long-term debt . . . . . . . . . . . . . . . 4,203
--------- ----------
Total current liabilities............................ 1,511,514 3,922,425
--------- ----------
Long-term debt, net of current maturities (including debt
owed to Kimmins of $2,003,258 at December 31, 1997
and September 30, 1998)................................... 2,003,258 2,319,859
Deferred income taxes.............................................. 2,267,742 ---
Commitments and contingencies...................................... --- ---
Stockholders' equity:
Preferred stock, $.001 par value; 1,000,000 shares
authorized; none issued and outstanding................. --- ---
Capital stock, $.001 par value; 10,000,000 shares
authorized; 4,010,000 shares issued and 4,000,000
shares outstanding...................................... 4,010 4,010
Capital in excess of par value............................ 12,193,547 11,675,547
Retained earnings (deficit)............................... (1,094,597) 18,733,883
Unrealized loss on securities net of tax of $11,000. . . . --- (140,790)
--------- ----------
11,102,960 30,272,650
Less treasury stock, at cost (10,000 and 87,000 shares at
December 31,1997 and September 30, 1998, respectively).... (48,006) (412,208)
--------- ----------
Total stockholders' equity........................... 11,054,954 29,860,422
--------- ----------
Total liabilities and stockholders' equity........... $16,837,468 $36,102,726
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
2
<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended September 30,
1997 1998
(unaudited) (unaudited)
<CAPTION>
<S> <C> <C> <C>
Revenue............................................................ $ 2,541,886 $ 2,086,431
Expenses:
Operating expenses........................................ 2,262,985 2,250,824
Selling, general, and administrative expenses............. 218,851 347,896
--------- ----------
Operating income (loss)............................................ 60,050 (512,289)
Interest income, net of expense.................................... 66,606 90,717
--------- ----------
Income (loss) from continuing operations before income 126,656 (421,572)
taxes..............................................................
Provision for income taxes (benefit). . . . . . . . . . . . . . . . 49,291 (139,064)
--------- ----------
Income (loss) from continuing operations........................... 77,365 (282,508)
Discontinued operations:
Gain on sale of discontinued solid waste division net of
tax of $9,162,149. . . . . . . . . . . . . . . . . . . . . . . --- 16,662,818
Loss from discontinued solid waste division
(less applicable tax provision of ($893,283)
in 1997)............................................... (1,397,191) ---
----------- ----------
Income (loss) from discontinued operations (1,397,191) 16,662,818
----------- ----------
Net income (loss).................................................. $ (1,319,826) $16,380,310
============== ===========
Share data:
Basic income per share from continuing operations......... $ (.33) $ (.07)
============== ============
Diluted income per share from continuing operations....... $ (.32) $ (.07)
============== ============
Basic income (loss) per share from discontinued
operations.............................................. $ - $ 4.19
============== ============
Diluted income (loss) per share from discontinued
operations.............................................. $ - $ 4.19
============== ============
Total basic income (loss) per share....................... $ (.33) $ 4.12
============== ============
Total diluted income (loss) per share..................... $ (.32) $ 4.12
============== ============
Weighted average number of shares outstanding used in computations:
Basic.................................................. 4,000,000 3,977,109
============== ============
Diluted................................................ 4,041,470 3,977,109
============== ============
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
3
<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine months ended September 30,
1997 1998
(unaudited) (unaudited)
<S> <C> <C> <C>
Revenue............................................................ $ 9,601,267 $ 6,396,808
Expenses:
Operating expenses........................................ 7,654,167 5,803,479
Selling, general, and administrative expenses............. 778,383 713,313
------------ -----------
Operating income (loss) ........................................... 1,168,717 (119,984)
Interest income, net of expense.................................... (202,575) 262,511
------------ -----------
Income from continuing operations before income taxes.............. 1,371,292 142,527
Provision for income taxes (benefit) . . . . . . . . . . . . . . . . 534,699 55,585
------------ -----------
Income from continuing operations.................................. 836,593 86,942
Discontinued operations:
Gain on sale of discontinued solid waste division net of
tax of $11,164,205. . . . . . . . . . . . . . . . . . . . . . --- 19,921,581
Loss from discontinued solid waste management
operations (less applicable tax benefit of $1,280,000 in
1997 and $81,593 tax provision in 1998................. (2,289,368) (180,043)
------------ ----------
Income (loss) from discontinued operations (2,289,368) 19,741,538
------------ ----------
Net income (loss)......................................... $ (1,452,775) $ 19,828,480
============= ============
Share data:
Basic income per share from continuing operations......... $ (.36) $ .02
============= ============
Diluted income per share from continuing operations....... $ (.33) $ .02
============= ============
Basic income (loss) per share from discontinued
operations.............................................. $ - $ 4.94
============= ============
Diluted income (loss) per share from discontinued
operations.............................................. $ - $ 4.90
============= ============
Total basic income (loss) per share....................... $ (.36) $ 4.97
============= ============
Total diluted income (loss) per share..................... $ (.33) $ 4.96
============= ============
Weighted average number of shares outstanding used in computations:
Basic.................................................. 4,061,029 3,992,286
============= ============
Diluted................................................ 4,061,029 4,026,844
============= ============
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
4
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended September 30,
1997 1998
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations..................... $ 836,953 $ 86,942
Adjustments to reconcile net income from continuing
operations to net cash provided by operating activities:
Depreciation and amortization........................ 3,164,419 72,081
Gain on disposal of equipment........................ (563,689) -
Changes in operating assets and liabilities:
Accounts receivable.............................. 988,639 (328,399)
Costs and estimated earnings in excess of
billings on uncompleted contracts............. (204,340) 71,156
Income tax refund receivable/payable............. (792,239) (1,661,225)
Other assets..................................... (579,183) (20,798)
Accounts payable................................. (49,237) 649,624
Accrued expenses................................. (14,823) 1,270,774
Billings in excess of costs and estimated
earnings on uncompleted contracts............. (163,016) 368,875
----------- ------------
Total adjustments......................................... 1,786,531 422,088
----------- ------------
Net cash provided by continuing operations................ 2,623,124 509,030
Net loss from discontinued operations................... (2,289,368) (180,043)
Changes in net assets of discontinued operations.......... - 7,265,280
----------- ------------
Net cash provided by operating activities................. 333,756 7,594,267
----------- ------------
Cash flows from investing activities:
Capital expenditures...................................... (5,810,279) (400,000)
Fixed asset transfers from discontinued operations. . . . - (459,640)
Proceeds from sale of property and equipment.................. 1,821,343 -
Gain on sale of assets of discontinued operations......... - 19,921,581
Purchase of marketable securities. . . . . . . . . . . . . . . - (4,982,000)
Investment in Eastern stock. . . . . . . . . . . . . . . . . . . - (16,877,210)
Unrealized loss on marketable securities. . . . . . . . . . . (140,790)
----------- ------------
Net cash provided by (used in) investing activities................ (3,988,936) (2,938,059)
----------- ------------
Cash flows from financing activities:
Proceeds from long-term debt.............................. 4,272,544 320,804
Repayment of long-term debt............................... (3,443,336) -
Proceeds from advances to Kimmins......................... 6,061,980
Repayment of advances from Kimmins........................ - 2,960,741
Reduction in paid in capital from Kimmins................. - (518,000)
Purchase of treasury stock. . . . . . . . . . . . . . . . . . - (364,202)
----------- ------------
Net cash provided by (used in) financing activities................ 6,891,188 2,399,343
----------- ------------
Net increase (decrease) in cash................................... 3,236,008 7,005,551
Cash, beginning of period.......................................... 1,437,788 2,115,510
------------ -------------
Cash, end of period................................................ $ 4,673,796 $ 9,171,061
------------- -------------
</TABLE>
5
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDTED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
Organization - TransCor Waste Services, Inc. (the "Company") was formed
on November 6, 1992, as a subsidiary of Kimmins Corp. ("Kimmins"). As of
September 30, 1998, Kimmins owns approximately 83 percent of the outstanding
common stock of the Company. The Company provided solid waste management
services to commercial, industrial, residential, and municipal customers in the
state of Florida. The Company is winding down its demolition services and will
transfer those operations to Kimmins. The Company sold the stock of its wholly
owned subsidiary, Kimmins Recycling Corp (KRC) to a competitor on September 2,
1998. As a result of the sale, the Company exited the solid waste industry.
Basis of presentation - The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three- and nine-month
periods ended September 30, 1998, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998. For further
information, refer to the consolidated financial statements and notes thereto as
of and for the year ended December 31, 1997, included in the Company's Form 10-K
dated December 31, 1997, as filed with the United States Securities and Exchange
Commission.
Certain amounts in the 1997 consolidated financial statements have been
reclassified to conform to the 1998 presentation.
Intangible assets - Intangible assets consist primarily of the excess
of cost over fair market value of the net assets of the acquired business, which
will be amortized on a straight-line basis over twenty years, and customer
contracts, which will be amortized on a straight-line basis over five years. The
intangible assets, including customer contracts, were sold on May 31, 1998, as
part of the sale of the Jacksonville operations to Eastern Environmental
Services of Florida, Inc. See Note 3 for additional information.
Other assets - Other assets consist primarily of pre-contract costs
associated with residential solid waste management contracts obtained during
1997 and 1998, which are being amortized on a straight-line basis over five
years, the term of the contracts, and loan costs, which are amortized over the
term of the loans. All pre-contract costs capitalized as of December 31, 1997,
are held by KRC, which was sold effective August 31, 1998. Accordingly,
pre-contract costs are included in "net assets of discontinued operations" at
December 31, 1997. There are no capitalized pre-contract costs at September 30,
1998.
6
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies (continued)
Earnings per share - Net income (loss) per share is computed based on
the weighted average number of shares of capital stock. Diluted earnings per
share includes unexercised stock options assuming an average stock price. The
convertible subordinated debt was not included in the computations because the
assumed conversion would be antidilutive.
Marketable Securities - As a result of the sale of Kimmins Recycling
Corp. (KRC) to Eastern Environmental Services, Inc. (EESI), the Company received
555,329 shares of common stock of EESI. Additionally, commencing in September
1998, the Company began purchasing common stocks and other marketable securities
with a portion of the cash proceeds received from the sale of KRC. In accordance
with the Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", the investments are
classified as available-for-sale securities. Such securities are carried at an
aggregate market value of $21,859,000 as of September 30, 1998. The Company's
cost basis in these investments is $22,000,000, and the unrealized loss of
approximately 141,000, net of deferred income taxes of approximately $89,000, is
reported as a separate component of shareholder's equity.
2. Property held for sale
As a result of management's review of the Company's various regional
solid waste operating facilities, a decision was made to dispose of less
profitable operating assets. The Company sold its residential solid waste
services contract with St. Lucie County in 1997 to a competitor and ceased
operations at its Lantana, Florida, facility. The Company wrote off intangible
assets of $183,000 associated with these operations. Also, in accordance with
SFAS No. 121, "Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," the Company wrote down certain land and buildings that management
believed had carrying amounts higher than their fair market value.
The impairment loss of $590,000 was determined by comparing the
carrying amount of impaired assets of approximately $2,834,000 with recent
offers on the properties held for sale. The $590,000 impairment loss is included
in selling, general and administrative expenses on the consolidated statements
of operations for the year ended December 31, 1997. The land and buildings held
at September 30, 1998 and December 31, 1997 which were not included in the sale
of TransCor's solid waste services division were carried at $1,210,000 and
$411,000 respectively, net of an impairment loss of $90,000 as a long-term asset
under the caption "Property held for sale".
TransCor's land and buildings which were being held for sale and were
included in the sale of the solid waste services division are included in the
caption "net assets of discontinued solid waste management operations" and are
carried net of an impairment loss of $500,000 at $1,834,000 at December 31,
1997.
7
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3.Property and equipment, net
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
(unaudited)
<S> <C> <C> <C> <C>
Land...................................................... $ 3,019,969 $ ---
Buildings and improvements................................ 4,068,476 ---
Vehicles.................................................. 16,936,386 ---
Waste containers and equipment............................ 13,133,877 699,552
Furniture and fixtures.................................... 700,711 4,003
Construction in progress.................................. 48,419 ---
----------- ----------
37,907,838 703,555
Less accumulated depreciation............................. (12,846,420) (402,462)
----------- ----------
25,061,418 301,093
Less net property and equipment included in net assets
of discontinued solid waste management operations....... (24,748,670) ---
----------- ----------
Net property and equipment attributable to assets of
continuing operations................................... $ 312,748 $ 301,093
============= ==========
</TABLE>
Property and equipment is recorded at cost. Depreciation is provided
using the straight-line method over estimated useful lives, which range from 3
to 30 years. Depreciation expense was $2,765,000 and $2,308,000 for the nine
months ended September 30, 1997 and 1998, respectively. For the nine months
ended September 30, 1998, $72,000 of depreciation expense was attributable to
continuing operations and $2,236,000 was attributable to discontinued
operations.
8
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Long-term debt
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
(unaudited)
<S> <C> <C> <C> <C>
Notes payable, due through March 1, 2001,
payable in monthly installments with interest
at varying rates up to 9.75 percent, collateralized
by equipment................................................ $ 14,191,400 $ ---
Convertible subordinated term note to Kimmins,
interest payable in monthly installments, principal
due December 1, 2003, interest at bank's base rate
(8.5 percent) plus 1 percent............................... 2,003,258 2,003,258
Mortgage notes, principal and interest payable in monthly
installments hrough August 1, 2010, interest at varying
rates up to prime plus 1.5 percent, collateralized
by land and buildings..................................... 4,860,013 320,804
----------- ----------
Total long-term debt...................................... 21,054,671 2,324,062
Less debt of discontinued operations:
Long-term debt.......................................... (14,389,103) ---
Current portion of long-term debt....................... (4,662,310) (4,203)
----------- ----------
Long-term debt of continuing operations................... $ 2,003,258 $ 2,319,859
============ ===========
</TABLE>
As of September 30, 1998, the Company is a co-borrower with joint and
several liability on approximately $3,779,000 of financial institution debt of
Kimmins. The debt agreements contain certain covenants, the most restrictive of
which require, for Kimmins for 1998, maintenance of a consolidated tangible net
worth, as defined, of not less than $7,500,000 and net income not less than
$3,000,000. In addition, the covenants prohibit the payment of dividends by the
Company without lender approval. For all periods presented and for all of 1998,
the Company believes that Kimmins has complied with or obtained waivers for all
loan covenants.
The lenders' prime and base rates under the Company's notes were 8.5
percent at September 30, 1998.
9
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Stockholders' equity
The Company has authorized 1,000,000 shares of preferred stock with a
par value of $.001 per share, none of which has been issued. Such preferred
stock may be issued in series and will have such designations, rights,
preferences, and limitations as may be fixed by the Board of Directors.
The convertible subordinated term note is convertible into 400,652
shares of the Company's capital stock at the time the market value per share
equals or exceeds $9.00 for twenty consecutive trading days.
Warrants to purchase 100,000 shares of the Company's common stock at
$6.00 per share were issued in 1993 to the underwriters of the Company's initial
public offering. Warrants to purchase 10,000 shares of common stock were
exercised during March 1996. The remaining warrants to purchase 90,000 shares
expired on March 25, 1998, without being exercised.
The Company is using part of the proceeds from the sale of KRC to
repurchase Company stock at prevailing market prices. There were 10,000 and
87,000 shares of treasury stock at December 31, 1997 and September 30, 1998,
respectively.
6. Related Party Transactions
On August 14, 1998, Kimmins, the parent of the Company, acquired an
additional 297,200 shares of common stock of the Company for $3,031,000 from
Francis M. Williams, President and Chief Executive Officer of Kimmins. The
acquisition increased Kimmins' ownership percentage to 81 percent from 74
percent and results in the ability to consolidate the Company and Kimmins for
federal income tax purposes on a prospective basis.
7. Discontinued operations
On May 31, 1998, the Company sold its Jacksonville area waste
collection and recycling operating assets and certain assets of the Miami
front-end load and rear-load commercial waste and recycling business to Eastern
Environmental Services of Florida, Inc., for $11,600,000 in cash. The proceeds
exceeded the net book value of the underlying assets sold by approximately
$5,200,000. This gain is shown in the Consolidated Statements of Operations as
part of "gain on sale of discontinued operations."
On July 17, 1998, the Company adopted a formal plan to sell its solid
waste management services operations to a competitor Eastern Environmental
Services, Inc. (EESI). On August 31, 1998 the Company completed the sale of the
solid waste management services (SWMS) operations. The assets sold consisted
primarily of accounts receivables, contracts and property and equipment. The
selling price was $57,800,000 in the form of cash and EESI common stock.
Operations for SWMS for the six months ended June 30, 1998 are shown
separately in the accompanying income statement. The consolidated statements of
operations for the three and nine month periods ended September 30, 1997 have
been restated to show separately the operating results of the SWMS operations.
Net revenues of the SWMS operations for the three and nine month
periods ending September 30, 1997 and 1998 were $9,793,000 and $6,679,000, and
$32,684,000 and $27,276,000, respectively. These amounts are included in the
income or loss from discontinued operations portion of the accompanying
consolidated statements of operations. Approximately $7,610,000 of these net
revenues were received after the Company's adoption of the plan to sell the SWMS
operations.
10
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Discontinued operations (continued)
Information related to the discontinued SWMS operations of KRC for the
three- and nine-month periods ended September 30, 1998, is as follows:
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September 30,
1998 1998
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net revenue............................................... $ 4,833,000 $ 21,526,000
Operating expenses........................................ 4,384,000 18,176,000
Selling, general and administrative expenses.............. 1,650,000 4,002,000
-------------- --------------
Operating income.......................................... (1,201,000) (652,000)
Non-operating gain on sale of assets...................... (458,000) 4,805,000
Interest expense, net..................................... 221,000 913,000
-------------- --------------
Income before provision for income taxes................. (1,880,000) 3,240,000
Income taxes.............................................. (722,000) 1,280,000
-------------- --------------
Net income................................................ $ (1,158,000) $ 1,960,000
============== =============
Assets and liabilities of the discontinued SWMS operations sold
consisted of the following:
August 31, 1998 December 31, 1997
--------------- -----------------
Accounts receivable $ 2,443,670 $ 3,885,857
Other current assets 2,215,369 572,951
Property and equipment 25,843,325 27,583,052
Intangible assets 74,898 606,975
Other assets 826,892 1,142,205
------------- ------------
Total assets 31,404,154 33,579,478
Current liabilities 10,017,834 26,525,760
------------- ------------
Net assets disposed of $ 21,386,320 $ 7,265,280
============= ============
</TABLE>
Net assets sold have been separately classified in the accompanying
balance sheet at December 31, 1997.
The sale of the Company's SWMS operations to EESI for approximately
$57,800,000 resulted in a gain of approximately $19,922,000 net of taxes
approximately $11,164,000. Approximately $15.1 million of the cash proceeds were
used to pay off debt on the property and equipment of the SWMS operations. An
additional $6.6 million was used to fund the working capital deficit of the SWMS
operations at August 31, 1998.
11
<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Earnings per share
As required by Financial Accounting Standards Board Statement No. 128, the
following tables set forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three months ended
September 30,
1997 1998
------------------------
Numerator:
<S> <C> <C>
Income from continuing operations......................... $ 77,365 $ (282,508)
Adjustment for basic earnings per share................... - -
---------- -----------
Numerator for basic earnings per share - income
available to common stockholders........................ 77,365 (282,508)
Effect of dilutive securities:
Interest on convertible subordinated term note............ - -
Less tax effect of interest............................... - -
----------- -----------
Numerator for diluted earnings per share:
Income from continuing operations....................... 77,365 (282,508)
Income (loss) from discontinued operations.............. (1,397,191) 6,662,818
------------ -----------
Income (loss) applicable to common stockholders
after assumed conversions.............................. $(1,319,826) $16,380,340
============ ============
Denominator:
Denominator for basic earnings per share -
weighted-average shares................................. 4,000,000 3,977,109
Effective of dilutive securities:
Stock options............................................. 41,570 -
Warrants.................................................. - -
Convertible subordinated term note........................ - -
---------- ----------
Dilutive potential common shares.......................... 41,570 -
---------- ----------
Denominator for diluted earnings per share -
adjusted weighted-average shares and assumed
conversions............................................. 4,041,570 3,977,109
=========== ===========
Basic income (loss) per share from continuing
operations.............................................. $ .02 $ (.07)
=========== ===========
Diluted income (loss) per share from continuing
operations.............................................. $ (.02) $ (.07)
=========== ===========
Basic income (loss) per share from discontinued
operations.............................................. $ (.35) $ 4.19
=========== ===========
Diluted income (loss) per share from discontinued
operations.............................................. $ (.35) $ 4.19
=========== ===========
Total basic income (loss) per share....................... $ (.33) $ 4.12
=========== ===========
Total diluted income (loss) per share..................... $ (.33) $ 4.12
=========== ===========
12
<PAGE>
8. Earnings per share (continued)
Nine months ended
September 30,
1997 1998
----------------------------
Numerator:
Income from continuing operations......................... $ 836,593 $ 86,942
Adjustment for basic earnings per share................... - -
------------ -----------
Numerator for basic earnings per share - income
available to common stockholders........................ 836,593 86,942
Effect of dilutive securities:
Interest on convertible subordinated term note............ - -
Less tax effect of interest............................... - -
------------ -----------
Numerator for diluted earnings per share:
Income from continuing operations....................... 836,593 86,942
Income (loss) from discontinued operations.............. 2,289,368) 19,741,538
------------ ------------
Income (loss) applicable to common stockholders
after assumed conversions.............................. $(1,452,775) $19,828,480
============ ============
Denominator:
Denominator for basic earnings per share -
weighted-average shares................................. 4,000,000 3,992,286
Effective of dilutive securities: 51,041 34,558
Stock options............................................. - -
Warrants.................................................. - -
Convertible subordinated term note........................ - -
------------- ------------
Dilutive potential common shares.......................... 51,041 34,558
------------- ------------
Denominator for diluted earnings per share -
adjusted weighted-average shares and assumed
conversions............................................. 4,051,041 4,026,844
============= ============
Basic income per share from continuing operations.........
$ .21 $ .02
============= ============
Diluted income per share from continuing operations.......
$ .21 $ .02
============= ============
Basic income (loss) per share from discontinued
operations.............................................. $ (.57) $ 4.95
============= ============
Diluted income (loss) per share from discontinued
operations.............................................. $ (.57) $ 4.90
============= ============
Total basic income (loss) per share....................... $ (.36) $ 4.97
============= ============
Total diluted income (loss) per share..................... $ (.36) $ 4.92
============= ============
</TABLE>
Unexercised options to purchase 209,000 shares of common stock for 1998
are included in the above calculations. The convertible subordinated debt and
unexercised options to purchase 92,000 shares of common stock for 1997 were not
included in the computations of diluted income per share because the assumed
conversion would be antidilutive.
13
<PAGE>
9. Comprehensive Income
In accordance with Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income", which is effective for fiscal years beginning
after December 15, 1997, the following table summarizes the Company's components
of comprehensive income:
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1998 1997 1998
------------------------ -----------------------
<S> <C> <C> <C> <C>
Net Income ($1,319,826) $16,380,310 ($1,452,775) $19,828,480
Unrealized losses on securities net
of tax - 140,790 - 140,790
----------- ------------ ------------ ------------
Comprehensive income ($1,319,826) $16,239,520 ($1,452,775) $19,687,690
============ ============ ============= ============
</TABLE>
14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenue from continuing operations for the three months ended September
30, 1998, was $2,086,000, representing a decrease of $455,000, or approximately
18 percent, from $2,542,000 for the three months ended September 30, 1997. The
decrease in total revenue was attributable to the Company's demolition
operations, as a result of the Company's decision to wind down its demolition
operations and transfer them to Kimmins. The Company is no longer bidding on new
contracts and expects to complete its remaining contracts by the first quarter
of 1999. In addition, discontinued operations from solid waste management
services experienced a decrease in revenue of $2,777,000 to $4,832,000 for the
three months ended September 30, 1998, compared to $7,610,000 for the same
period in 1997 primarily as a result of the sale of KRC to EESI and also to
sales of operating assets, including customer contracts.
Operating expenses for the three months ended September 30, 1998, were
$2,251,000, representing a decrease of $12,000, or approximately 1 percent, from
$2,263,000 for the three months ended September 30, 1997. The increase in the
percentage in operating expenses was attributable primarily to increases in
certain major operational expenses; such as, equipment and direct labor costs
related to the Company's demolition operations caused by weather related delays.
For continuing operations, selling, general, and administrative
expenses for the three months ended September 30, 1998, were $348,000,
representing an increase of $129,000, or approximately 59 percent, from $219,000
for the three months ended September 30, 1997. The increase is primarily
attributable to costs associated with the sale of the discontinued SWMS
operations. For discontinued operations, selling, general and administrative
expenses for the three months ended September 30, 1998, were $1,649,000,
representing a decrease of $492,000, or 23 percent, from $2,141,000 for the same
period in 1997. The dollar and percentage decrease in selling, general, and
administrative expenses is primarily attributable to reduced overhead costs,
such as administrative, sales, marketing and labor costs that are associated
with facilities that have been closed or sold and from management's actions to
reduce overhead costs.
Revenues and costs for the remainder of the year will be substantially
decreased primarily due to the sale of the solid waste operations and the
continuation of the winding down of the demolition operations during the fourth
quarter 1998. See Note 6 for additional information regarding the sale.
Interest income, net of interest expense, for the three months ended
September 30, 1998, was $91,000 as compared to $67,000 for the three months
ended September 30, 1997. The average amount of debt outstanding decreased
between periods.
The Company's income tax provision for continuing operations was
calculated using a rate of approximately 37 percent and 39 percent for the three
month periods ended September 30, 1998 and 1997, respectively.
As a result of the foregoing, the Company recorded a loss from
continuing operations of $283,000 for the three months ended September 30, 1998,
as compared to income of $77,000 for the three months ended September 30, 1997.
15
<PAGE>
In addition to the continuing operations, the Company incurred no
losses from discontinued solid waste management services operations for the
three months ended September 30, 1998, representing a decrease of $1,397,000 or
approximately 92 percent from $1,397,000 for the three months ended September
30, 1997. The dollar and percentage decrease in losses is primarily attributable
to the sale of KRC in August 1998, the sale of certain operating assets in May
1998 and reduced overhead costs such as administrative, sales, marketing and
labor costs as a result of facility closures and managements actions to reduce
overhead costs.
The Company's sale of KRC to EESI for approximately $57,800,000
resulted in a gain of $16,663,000 net of taxes of $9,162,000. Also included in
the gain are losses of $1,729,000 net of a tax benefit of $1,105,000 from
discontinued solid waste management services operations for the period from the
measurement date on July 14, 1998 through August 31, 1998.
The Company reported net income of $16,380,000 for the three months
ended September 30, 1998 compared with a net loss of $1,320,000 for the same
period during 1997.
16
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenue for the nine months ended September 30, 1998, was $6,397,000,
representing a decrease of $3,204,000, or approximately 33 percent, from
$9,601,000 for the nine months ended September 30, 1997. The decrease in total
revenue was primarily attributable to the Company's demolition operations, as a
result of the Company's decision to wind down its demolition operations and
transfer them to Kimmins. The Company is no longer bidding on new contracts and
expects to complete its remaining contracts by the first quarter of 1999. In
addition, discontinued operations from solid waste management services
experienced a decrease in revenue of $2,862,000 to $21,526,000 for the nine
months ended September 30, 1998, compared to $24,388,000 for the same period in
1997. The decrease was primarily the result of the sale of KRC to EESI and sales
of operating assets, including customer contracts.
Operating expenses for the nine months ended September 30, 1998, were
$5,803,000, representing a decrease of $1,851,000, or approximately 24 percent,
from $7,654,000 for the nine months ended September 30, 1997. The increase in
the percentage in operating expenses was attributable primarily to increases in
certain major operational expenses; such as, equipment and direct labor costs
related to the Company's demolition operations as a result of weather related
delays.
For continuing operations, Selling, general, and administrative
expenses for the nine months ended September 30, 1998, were $1,713,000,
representing a decrease of $65,000, or approximately 9 percent, from $778,000
for the nine months ended September 30, 1997. For discontinued operations,
selling, general and administrative expenses for the nine months ended September
30, 1998, were $4,002,000, representing a decrease of $2,103,000, or 34 percent,
from $6,105,000 for the same period in 1997. The dollar and percentage decrease
in selling, general, and administrative expenses is primarily attributable to
reduced overhead costs, such as administrative, sales, marketing and labor costs
that are associated with facilities that have been closed or sold and from
management's actions to reduce overhead costs.
The Company sold its Jacksonville area waste collection and recycling
operating assets and certain assets of the Miami front-end load and rear-load
commercial waste and recycling business to Eastern Environmental Services of
Florida, Inc., for $11,600,000 in cash. This transaction, combined with the
Company's sale of certain other vehicles, waste containers, and equipment during
the three months ended September 30, 1998, resulted in a gain of approximately
$5,263,000. These assets were primarily utilized in the Company's commercial and
residential waste collection services. This gain is included in gain on sale of
discontinued operations for the nine-month period ended September 30, 1998.
Revenues and costs for the remainder of the year will be substantially
decreased primarily due to the sale of the solid waste operations and the
continuation of the winding down of the demolition operations during the fourth
quarter of 1998. See Note 6 for additional information regarding the sale.
Interest income, net of interest expense, for the nine months ended
September 30, 1998, was $263,000 as compared to interest expense of $203,000 for
the nine months ended September 30, 1997. The average amount of debt outstanding
decreased between periods.
17
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (continued)
The Company's income tax provision for continuing operations was
calculated using a rate of approximately 39 percent for both the nine month
periods ended September 30, 1998 and 1997.
As a result of the foregoing, the Company recorded income from
continuing operations of $87,000 for the nine months ended September 30, 1998,
as compared to income of $837,000 for the nine months ended September 30, 1997.
In addition the continuing operations, the Company incurred losses from
discontinued solid waste management services operations of $180,000 for the nine
months ended September 30, 1998, representing a decrease of $2,109,000 or
approximately 92 percent from $2,289,000 for the nine months ended September 30,
1997. The dollar and percentage decrease in losses is primarily attributable to
the sale of KRC in August 1998, the sale of certain operating assets in May 1998
and reduced overhead costs such as administrative, sales, marketing and labor
costs as a result of facility closures and managements actions to reduce
overhead costs.
The Company's sale of KRC to EESI for approximately $57,800,000
resulted in a gain of $19,992,000 net of taxes of $11,164,000. Also included in
the gain are losses of $1,729,000 net of a tax benefit of $1,105,000 from
discontinued solid waste management services operations for the period from the
measurement date on July 14, 1998 through August 31, 1998.
The Company reported net income of $19,828,000 for the nine months
ended September 30,1998 compared with a net loss of $1,453,000 for the same
period during 1997.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company had a working capital surplus of
$29,569,000 compared to a working capital surplus of $10,562,000 at December 31,
1997. Working capital was impacted primarily by increases in cash, and
marketable securities. Current financial resources, anticipated funds from
operations, and repayment of receivables from affiliate (if needed) are expected
to be adequate to meet cash requirements in the year ahead and the foreseeable
future. At September 30, 1998, the Company had cash of $9,171,000 and marketable
securities of $21,859,000.
Net cash provided by operating activities during the nine months ended
September 30, 1998, was $7,594,000 compared to $334,000 for the nine months
ended September 30, 1997. The increase in cash provided by operating activities
was due primarily to changes in net assets in discontinued operations.
Net cash used in investing activities during the nine months ended
September 30, 1998, was $2,938,000 as compared to $3,989,000 for the nine months
ended September 30, 1997. The decrease in cash used in investing activities is
primarily attributable to a gain of $19,992,000 from the sale of assets of
discontinued operations which was offset by investment in Eastern stock and
marketable securities of $21,859,000.
18
<PAGE>
Net cash provided in financing activities during the nine months ended
September 30, 1998, was $2,399,000 as compared to $6,891,000 for the nine months
ended September 30, 1997. This was primarily a result of a reduced amount of
cash advances from Kimmins in 1998 as compared to 1997.
During the nine months ended September 30, 1998 and 1997, the Company's
average trade receivables were outstanding for 65 and 63 days, respectively.
Both averages were based on the first nine months of revenue annualized and
compared to the trade receivable balances at quarter end. Management believes
that the number of days outstanding for its receivables approximates industry
norms. Credit is extended based on an evaluation of the customer's financial
condition. Credit losses are provided for in the financial statements and have
been within management's expectations.
During the nine months ended September 30, 1998 and 1997, the Company's
average trade payables were extended for 19 and 50 days, respectively. Both
averages were based on the first nine months of operating and selling, general,
and administrative expenses annualized and compared to trade payable balances at
quarter end.
19
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (continued)
As of September 30, 1998, the Company is a co-borrower with joint and
several liability on approximately $2,201,000 of financial institution debt of
Kimmins. The debt agreements contain certain covenants, the most restrictive of
which require, for Kimmins for 1998, maintenance of a consolidated tangible net
worth, as defined, of not less than $7,500,000 and net income not less than
$3,000,000. In addition, the covenants prohibit the payment of dividends by the
Company without lender approval. For all periods presented and for all of 1998,
the Company believes that Kimmins has complied with or obtained waivers for all
loan covenants.
The Company has no current material commitments for capital
expenditures relating to any other new facilities, other than to acquire
vehicles and equipment estimated to be approximately $3,500,000 for the City of
Cape Coral Contract, which begins October 1, 1998. Cash of approximately
$41,000,000 is anticipated from the sale of the Company's solid waste
subsidiary, which closed on August 31, 1998. See Note 6 for additional
information regarding the sale.
Historically, inflation has not had a material effect on the Company's
operations. If inflation increases, the Company will attempt to increase its
prices to offset its increased expenses. No assurance can be given, however,
that the Company will be able to adequately increase its prices in response to
inflation.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS No. 128"). Statement No. 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share. The
Company adopted the provisions of Statement 128 No. effective December 31, 1997.
All earnings per share accounts for all periods presented have been restated to
conform to the Statement No. 128 requirements.
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income ("SFAS No. 130"). SFAS No.
130 requires that total comprehensive income and comprehensive income per share
be disclosed with equal prominence as net income and earnings per share.
Comprehensive income is defined as changes in stockholders' equity exclusive of
transactions with owners such as capital contributions and dividends. SFAS No.
130 is effective for fiscal years beginning after December 15, 1997. Management
is currently assessing the impact of SFAS No. 130, but does not expect its
effect to be material.
20
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"), which supercedes Financial Accounting Standards
No. 14. SFAS No. 131 uses a management approach to report financial and
descriptive information about a Company's operating segments. Operating segments
are revenue-producing components of the enterprise for which separate financial
information is produced internally for the Company's management. SFAS No. 131 is
effective for fiscal years beginning after December 31, 1997. Management is
currently assessing the impact of SFAS No. 131, but does not expect its effect
to be material.
The American Institute of Certified Public Accountants recently issued
Statement of Position 98-5, Reporting on the Costs of Start-up Activities.
Start-up costs are defined broadly in the SOP as those one-time activities
related to opening a new facility, introducing a new product or service,
conducting business in a new territory, conducting business with a new class of
customer or beneficiary, initiating a new process in an existing facility, or
commencing some new operation. Start-up costs, including organizational costs,
should be expensed as incurred under the new SOP. The SOP would be effective for
most entities for fiscal years beginning after December 15, 1998. As a result of
the sale of the Company's solid waste subsidiary, the Company will have no
capitalized start-up costs remaining at December 31, 1998.
Impact of Year 2000
Some of the Company's older computer programs were written using two
digits rather than four digits to define the applicable year. As a result, those
computer programs have time-sensitive software that recognize a date using "00"
as the year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
The Company has completed an assessment and will have to modify or
replace portions of its software so that its computer systems will function
properly with respect to dates in the year 2000 and thereafter. The total Year
2000 project is estimated to be immaterial to the financial statements. To date,
the Company's incremental costs for assessment of the Year 2000 issue, the
development of a modification plan, and the purchase of new software have been
insignificant.
The majority of software used by the Company is licensed from various
software providers who are currently updating our programs to be Year 2000
compliant. In-house developed programs comprise a small portion of the total
software utilized, and the majority of these programs are believed to be Year
2000 compliant.
The project is estimated to be completed not later than December 31,
1998, which is prior to any anticipated impact on its operating system. The
Company believes, with modifications to existing software and conversions to new
software, the Year 2000 issue will not pose significant operational problems for
its computer systems. However, if such modifications and conversions are not
made, or are not completed timely, the Year 2000 Issue could have a material
impact on the operations of the Company.
21
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company has initiated formal communications with all of its
significant suppliers and large customers to determine the extent to which the
Company's interface systems are vulnerable to those third parties' failure to
remediate their own Year 2000 Issues. There is no guarantee that the systems of
other companies on which the Company's systems rely will be timely converted and
would not have an adverse effect on the Company's systems.
The costs of the project and the date on which the Company believes it
will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
Forward-Looking Information
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, that reflect management's current views with respect to future events and
financial performance. Such forward looking statements include, without
limitation, statements regarding the Company's future capital expenditures,
facility closures, service demand and market growth, competitive position,
expected revenues from new contracts, ability to meet cash requirements, and
other statements regarding anticipated changes in the Company's Nasdaq listing,
future plans and strategies, anticipated events or trends, and similar
expressions concerning matters that are not historical facts. Such statements
involve risks and uncertainties, and there are certain important factors that
could cause actual results to differ materially from those anticipated. Some of
the important factors that could cause actual results to differ materially from
those anticipated include, but are not limited to, economic conditions,
competitive factors, increases in landfill charges, the outcome of competitive
bids, unanticipated costs in connection with facility closures, and other
uncertainties, all of which are difficult to predict and many of which are
beyond the control of the Company. Due to such uncertainties and risk, readers
are cautioned not to place undue reliance on such forward-looking statements,
which speak only as of the date hereof.
Effect of Inflation
Inflation has not had, and is not expected to have, a material impact
upon the Company's operations. If inflation increases, the Company will attempt
to increase its prices to offset its increased expenses. No assurance can be
given, however, that the Company will be able to adequately increase its prices
in response to inflation.
Item 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not required pursuant to Item 305, General Instruction 1.
22
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings
During June 1997, Kimmins Recycling Corp. ("KRC"), St. Lucie County, a
political subdivision of the State of Florida, and the City of Fort Pierce, a
municipality organized under the laws of the State of Florida, were notified of
a class action lawsuit filed in the Nineteenth Judicial Circuit Court of Florida
by three residents of St. Lucie County. This action challenged the propriety of
certain contract provisions included in KRC's solid waste and recyclable
materials collection service agreement with St. Lucie County, which allow KRC to
place liens on the property of delinquent service recipients. The court,
permitting KRC to file counterclaims against the class members, has with KRC's
consent certified the existence of a class. KRC, the county, and the city have
filed motions for summary judgement against the class plaintiff's claim, which
was heard on May 26, 1998. On June 12, 1998, the Court granted summary judgement
in favor of KRC, the County, and the City. At December 31, 1997, the total
amount of lien rights was approximately $474,000.
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security holders
None
Item 5. Other information
Effective with the close of business on June 10, 1998, the Company's
stock was delisted from the Nasdaq National Market because the Company could not
satisfy the market value public float requirement and was delinquent in filing
its 1997 Form 10-K and its 1998 first quarter Form 10-Q. The Company's
application to Nasdaq to initiate listing with the OTC Bulleting Service became
effective on August 17, 1998.
Item 6. Exhibits and reports on Form 8-K
(a) The following documents are filed as exhibits to this Form 10-Q:
27.1 - Financial Data Schedule - 1998 (for SEC use only)
27.2 - Financial Data Schedule - 1997(for SEC use only)
(b) Reports on Form 8-K:
On May 27, 1998, the Company filed a Form 8-K announcing the
sale of operating assets related to the Jacksonville facility
and certain operating assets related to the Miami facility. On
August 4, 1998, the Company filed an amended Form 8-K that
included the Asset Purchase Agreement relating to the sale.
On July 27, 1998, the Company filed a Form 8-K announcing the
sale of the common stock of Kimmins Recycling Corp. On August
4, 1998, the Company filed an amended Form 8-K that included
the Stock Purchase Agreement relating to the sale. On November
2, 1998 the Company updated the 8-K to include pro-forma
information regarding the sale.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSCOR WASTE SERVICES, INC.
By:/s/ JOSEPH M. WILLIAMS
Joseph M. Williams
President
November 23, 1998
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on November 23, 1998.
Date: November 23, 1998 By:/s/ JOSEPH M. WILLIAMS
Joseph M. Williams
President
(Principal Executive Officer)
Date: November 23, 1998 By:/s/ NORMAN S. DOMINIAK
Norman S. Dominiak
Treasurer and Chief Financial Officer
(Principal Accounting and Financial
Officer)
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000894096
<NAME> TRANSCOR WASTE SERVICES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 9,171,061
<SECURITIES> 21,859,210
<RECEIVABLES> 1,676,740
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,491,571
<PP&E> 703,555
<DEPRECIATION> 402,462
<TOTAL-ASSETS> 36,102,726
<CURRENT-LIABILITIES> 3,922,425
<BONDS> 0
0
0
<COMMON> 4,010
<OTHER-SE> 29,856,412
<TOTAL-LIABILITY-AND-EQUITY> 36,102,726
<SALES> 2,086,431
<TOTAL-REVENUES> 2,086,431
<CGS> 2,250,824
<TOTAL-COSTS> 2,250,824
<OTHER-EXPENSES> 347,896
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,717
<INCOME-PRETAX> (421,572)
<INCOME-TAX> (139,061)
<INCOME-CONTINUING> (282,508)
<DISCONTINUED> 16,662,818
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,380,310
<EPS-PRIMARY> 4.12
<EPS-DILUTED> 4.12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000894096
<NAME> TRANSCOR WASTE SERVICES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,115,510
<SECURITIES> 0
<RECEIVABLES> 1,364,772
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,073,929
<PP&E> 558,379
<DEPRECIATION> 245,631
<TOTAL-ASSETS> 16,837,468
<CURRENT-LIABILITIES> 1,511,514
<BONDS> 0
0
0
<COMMON> 4,010
<OTHER-SE> 11,050,944
<TOTAL-LIABILITY-AND-EQUITY> 16,837,468
<SALES> 2,541,886
<TOTAL-REVENUES> 2,541,886
<CGS> 2,262,985
<TOTAL-COSTS> 2,262,985
<OTHER-EXPENSES> 218,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,606
<INCOME-PRETAX> 126,656
<INCOME-TAX> 49,291
<INCOME-CONTINUING> 77,365
<DISCONTINUED> (1,397,191)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,319,826)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
